UCI Medical Center settles federal fraud case

UC Irvine has agreed to pay $1.2 million to settle claims that its hospital violated federal laws by routinely allowing residents to administer anesthesia with no supervision by physicians and then billing Medicare as if the doctors were present.

The settlement comes after a multiyear federal investigation that was triggered by a whistle-blower complaint filed by Dr. Dennis O'Connor, an anesthesiologist and former UCI professor.

O'Connor alleged in his 2008 lawsuit that the university had "pre-filled" records to make it appear that a physician was present when patients received anesthesia administered by residents or certified nurse anesthetists. In many instances, however, the physician was in a different building at the time, his complaint said.

In one case, a patient had a heart attack while undergoing anesthesia, O'Connor said in an interview, but there was no physician available to intervene. The patient survived.

University officials deny all of O'Connor's claims. They said they were settling to avoid the expense of protracted litigation.

In a brief statement, the university said the anesthesiology department had done "a top-to-bottom review" of its operations in 2008. Policies were strengthened and staff underwent training. The department now uses an electronic record-keeping system "that does not permit the practices alleged," the statement said.

The university "remains committed to the highest standards of patient care," the statement said.

Because he filed the whistle-blower lawsuit under the federal False Claims Act, O'Connor will receive $120,000 of the settlement.

O'Connor said he retired from UCI in 2008 after he repeatedly detailed the problems to several top university officials but was rebuffed. He said the university did its own investigation of his allegations in May 2006, but the report was never made public. "It just disappeared," O'Connor said. "That was disturbing." O'Connor now works at the Veterans Affairs hospital in Long Beach.

The settlement agreement covers conduct at the hospital from 2002 through 2011. The lawsuit was filed under seal in U.S. District Court while federal prosecutors investigated the allegations. A judge made the complaint public last week after the settlement was signed.

Besides the university, O'Connor's complaint also named seven university physicians as defendants. He said that each of them had either filed false surgical records or had participated in creating schemes to falsely bill Medicare and Medi-Cal for services. Those physicians included Dr. Peter Breen and Dr. Cynthia Anderson, who are both former chairs of the anesthesiology department and continue to work at the hospital. The two doctors did not respond to phone and email messages.

O'Connor said the department stretched its staff so far that doctors were scheduled to supervise procedures in two buildings at once, making proper oversight impossible. "It was all about money," he said.

He also found the medical center routinely billed Medicare for post-surgical checkups by physicians. The bills were fraudulent, he said, because the patient evaluations were performed by unsupervised medical residents.

O'Connor said an underlying problem in the department was physicians' failure to review cases where problems occurred and change practices so that they didn't happen again.

John Murray, the medical center's public information officer, said the university did not want to say more than its written statement.

The case wasn't the first time that investigators found problems in the medical center's anesthesiology department. In 2008, Medicare officials threatened to cut the university's funding after inspectors found doctors had falsified surgical records by filling them out before patients got to the operating table.

In 2010, the state Medical Board disciplined Dr. Breen. The professor admitted that in 2006 he had falsely filled out a surgery form for a cataract patient in advance of surgery. The board ordered Breen to attend courses in ethics and record-keeping.

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